View full sizeFirstEnergy Corp.'s West Akron campus is the home of FirstEnergy Solutions, the unregulated competitive subsidiary that increased sales and revenues in 2012 despite the sluggish economy. FirstEnergy Corp.

FirstEnergy Corp. on Monday reported lower sales and profits in 2012 than it achieved in 2011.

And the Akron-based power company actually lost money in the last three months of 2012 for a host of reasons, including expenses related to its decision to close old power plants, new regulatory and tax charges, and its adoption of a more conservative accounting for pension expenses.

Top executives blamed a sluggish regional economy -- including a 3 percent decline in industrial demand for the year-over-year drop in sales during a conference call with analysts. But they added that shale gas development in Ohio and Pennsylvania could change everything.

One unplanned expense were storms during 2012. The cost of repairs after Hurricane Sandy alone cost the company $850 million, including $600 million just in New Jersey. Some of those expenses will be paid by consumers over years to come, as the company decided to defer immediate rate increases.

Expenses related to closing old, inefficient power plants rather than adding costly pollution controls to meet stricter regulations nicked profits by 12 cents a share during the last three months of the years.

But the company's decision to use more conservative accounting to report employee pension and health care expenses took the biggest bite out of the bottom line the fourth quarter.

FirstEnergy pumped $600 million into its retirement investments during the year and put the entire expense on the books for the quarter rather than amortizing it over years, as it did before 2011.

That more conservative accounting alone reduced profits by 91 cents a share in the fourth quarter.

Here are the overall basic profit and loss numbers:

â¢The company reported a net income loss of $148 million for the fourth quarter, or 35 cents per share, on sales of $3.5 billion.

â¢In 2011, fourth-quarter net income was $98 million, or 23 cents per share, on sales of $3.9 billion.

â¢FirstEnergy's net income for all of 2012 was $770 million, or $1.84 cents per share, on total sales of $15.3 billion.

â¢In comparison, the company reported net income of $869 million for 2011, or $2.21 per share, on total sales of $16.1 billion.

The outlook for 2013 is not much rosier, but there should not be another pension obligation until 2015 or 2016, said the company.

FirstEnergy expects demand for power to increase by less than 1 percent this year.

But in the near future, demand could grow faster than ever if shale gas development sparks a manufacturing renaissance, Chief Financial Officer James Pearson told analysts during a public teleconference.

Chief Executive Anthony Alexander agreed.

"I'm being a little cautious in terms of how fast the economy will turn around," he said. "But I think the areas is poised to grow, and grow at rates that are potentially far greater than what we've seen in the past because of the economic development potential for the Marcellus and Utica shale.

"There are a lot of expectations right now in terms of manufacturing renaissance . . . (based on) the locational advantage they would have for energy.

"And we hope to see this as a catalyst for much more significant and much more sustained growth, not only in the manufacturing and industrial segments, but . . . through the commercial and the residential markets."

But that potential is not guaranteed, he stressed.

"So much depends on what happens to the economy in general. Are we going to be growing or continuing to kind of stagnate? Are we going to begin to use the resources we have as a country to really re-position the economic capability and potential, particularly of this region, to take advantage of it?"

FirstEnergy Solutions expanded its retail customer count by 42 percent in the year, growing from approximately 1.9 million customers at the end of 2011 to nearly 2.6 million at the end of 2012. The company took those customers from other utilities in Ohio and in Illinois by offering contracts directly to customers one at a time or to customers in entire towns.

FirstEnergy's Consolidated Report to the Financial Community -- which provides highlights on company developments as well as financial results for the year and for the fourth quarter of 2012 -- is posted on the company's website.

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